| Subject: Executor Fees |
Author:
The Mayor
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Date Posted: 11:05:25 04/14/14 Mon
My curiosity on Executor fees was peaked when I saw the amount paid out on Nanny's will so I thought I would research what the process is and how the fees are determined. This is what I found:
Is the Executor Entitled to Collect a Fee?
In Ontario, the entitlement of an Executor to compensation for his or her efforts on behalf of the Estate is statutory in nature. Specifically, Section 61(1) of the Trustee Act provides that “A trustee, guardian or personal representative is entitled to such fair and reasonable allowance for the care, pains and trouble, and the time expended in and about the estate, as may be allowed by a judge of the Superior Court of Justice.”
Certain criteria have been applied in many Ontario cases when fixing the compensation of Executors. In Re Toronto General Trust and Ontario Central Railway, the court considered the following five factors in setting the Executor’s compensation:
magnitude of the Estate;
care, responsibility and risks assumed by the Executor;
time spent by the Executor in carrying out his or her responsibilities;
skill and ability required and displayed by the Executor; and
results obtained and degree of success associated with the efforts of the Executor.
Although the above factors provide some guidance in terms of what criteria should govern the calculation of Executor’s fees, they do not provide a clear method for arriving at a value for the Executor’s compensation. Hence, in an effort to develop some consistency and predictability in the determination of Executor’s compensation, a court recognized guideline has evolved. It must be recognized that this is only a guideline and is subject to increase or decrease in appropriate circumstances and may also be disregarded altogether in favour of another approach. The guideline applies percentages to various categories of the Estate receipts and payments and is expressed as follows:
2 ½ % of the total value of capital receipts of the Estate
2 ½ % of the total capital disbursements of the Estate
2 ½ % of the total revenue receipts of the Estate
2 ½ % of the total of revenue disbursements of the Estate
Annual fee of 2/5 of 1% of the average annual market value of the capital of the Estate
Despite the guidelines, courts still require evidence to justify the quantum of compensation claimed by the Executor. This evidence can include time dockets or estimated time logs.
In a number of cases, courts have awarded an additional allowance to the Executor where the administration of the Estate was made more difficult than usual by reason of conflicting interests among the beneficiaries; where the Estate has involved the management and operation of a company; or where litigation was initiated by the Executor on behalf of the Estate. On the other hand, courts have reduced the Executor’s compensation from the guideline amount in cases where a large Estate which nonetheless was simple to administer was involved or where specific assets were being transferred.
My reading is that the fee structure is a guideline, however, the amount of work and complexity of work involved is a key factor in determining the fees. I was going to go back to the law firm and ask if the amount being paid out as fees been validated. I suspect not and thus the key sign off on discharging Bob from any future claims. The Mayor
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